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Exam 3: Adjusting Accounts for Financial Statements

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Question 111

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The adjusted trial balance of Thomas Company follows: Prepare the closing entries for Thomas Company.

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Question 112

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A company's ledger accounts and their end-of-period balances before closing entries are posted are shown below.What amount will be posted to Retained Earnings in the process of closing the Income Summary account? (Assume all accounts have normal balances.)

A) $16,780 debit
B) $7,180 credit
C) $16,780 credit
D) $18,280 credit
E) $23,780 credit

F) B) and C)
G) None of the above

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Question 113

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The accrual basis of accounting:

Describe a work sheet and explain why it is useful.

Discuss how accrual accounting enhances the usefulness of financial statements.

The approach to preparing financial statements based on recognizing revenues when they are earned and matching expenses to those revenues is:

The Income Summary account is used to close the permanent accounts at the end of an accounting period.

A 10-column spreadsheet used to draft a company's unadjusted trial balance,adjusting entries,adjusted trial balance,and financial statements and which is an optional tool in the accounting process is a(n) :

If a company failed to make the end-of-period adjustment to remove the amount earned from the Unearned Management Fees account,there would be an:

Manning,Co.collected six months' rent in advance from a tenant on November 1 of the current year.When cash was collected,the following entry was made: Prepare the required adjusting entry at December 31 of the current year.

On December 31,Connelly Company had performed $5,000 of management services for clients that had not yet been billed.Prepare Connelly's adjusting entry to record these fees earned.

An unadjusted trial balance is a listing of accounts and their balances prepared before adjustments are recorded.

Western Company had $500 of store supplies available at the beginning of the current year.During the year Western Company purchased $2,750 worth of store supplies.On December 31 of this year,$375 worth of store supplies remained. a.Calculate the amount of Western Company's store supplies expense for the current year.(Show your calculations.) b.Prepare the journal entry to adjust the supplies account.

Before an adjusting entry is made to accrue employee salaries,Salaries Expense and Salaries Payable are both understated.

From the adjusted trial balance,prepare an income statement for Martin Sky Taxi Services.

How is the profit margin calculated? Discuss its use in analyzing a company's performance.

The following information is available for the Wooden Company: From the information provided,calculate Wooden's profit margin ratio for each of the three years.Comment on the results,assuming that the industry average for the profit margin ratio is 6% for each of the three years.

Under the cash basis of accounting,no adjustments are made for prepaid,unearned,and accrued items.

The Supplies account had an adjusted balance of $2,000 on December 31,2013.During 2014,the company purchased $5,000 of supplies.A physical count of supplies at December 31,2014,shows $3,000 of supplies available.(Assume that prepaid expenses are initially recorded in asset accounts and that fees collected in advance of work are initially recorded as liabilities.) How would the company record the related adjusting entry at December 31,2014?

On January 1 a company purchased a five-year insurance policy for $1,800 with coverage starting immediately.If the purchase was recorded in the Prepaid Insurance account and the company records adjustments only at year-end,the adjusting entry at the end of the first year is: